Jump to content
House Price Crash Forum

Fifteen Years To Revert To The Mean


 Share

Recommended Posts

What a great read from 2005.

The Steps outlined are spot on so far.

We've gone past Step A and are now firmly in Step B:

Step B: As housing prices begin to decline, sales will continue, though more slowly and less frequently. Old habits die slowly. One year into the decline, housing speculators will have left the market, but home owners will generally still believe that prices will either resume their rise or at least flatten out, not continue to decline. Remember the first year of the stock market bubble decline, when most people hung in there until they'd lost all of their money? The first lesson of behavioral finance is that the most common mistake made by market participants is to hang on too long and fail to cut losses.
While home owners at this stage will borrow less against their houses, and loans will be more difficult to come by, the average home owner will still make frequent trips to Home Depot or hire contractors to make home repairs and improvements, believing they'll "get their money back" in an increase in the value of their home at least equal to the cost of fixing it. Some home owners will put their home up for sale—if they purchased early enough in the boom so that they can still realize a profit, even selling at five to twenty percent below the peak price.

If this writer continues to have got it exactly right, then we'll be bottoming out at Step F in about 2017.

Link to comment
Share on other sites

What a great read from 2005.

The Steps outlined are spot on so far.

We've gone past Step A and are now firmly in Step B:

Step B: As housing prices begin to decline, sales will continue, though more slowly and less frequently. Old habits die slowly. One year into the decline, housing speculators will have left the market, but home owners will generally still believe that prices will either resume their rise or at least flatten out, not continue to decline. Remember the first year of the stock market bubble decline, when most people hung in there until they'd lost all of their money? The first lesson of behavioral finance is that the most common mistake made by market participants is to hang on too long and fail to cut losses.
If this writer continues to have got it exactly right, then we'll be bottoming out at Step F in about 2017.
My information is that housing speculators left the market about 4 months ago (the crash was only promising and they already knew) I am already hearing the it will get better in spring talk at work. but I don't think it will be 15 years, it is falling too fast and too hard. it is also in tandem with a general economic shrinkage and i think that the symbiosis between the 2 will ensure a painful 4 - 5 years.
Link to comment
Share on other sites

  • 4 weeks later...

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    No registered users viewing this page.





×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.